Nordic Business Report-March 29, 2006-Bonds, CDS spreads tighten on Glitnir S&P rating
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Bonds and credit default swap (CDS) spreads on Iceland's main three banks tightened on Tuesday (28 March), following Standard & Poor's decision to issue Glitnir Bank an A-minus long-term rating, analysts said on Wednesday. Glitnir's head of international financing Ingvar Ragnarsson told Icelandic Financial News (IFN) that CDS spreads on bonds issued by the bank dropped by 9-10 basis points shortly after the announcement. Ragnarsson said that S&P's decision had also infected CDS spreads on bonds issued by Kaupthing Bank and Landsbanki Islands. He added that bond spreads had also tightened on the back of the ratings decision. Shares in Icelandic financial companies have dropped this month as a result of a critical report by investment bank Merrill Lynch, which said that Iceland's main three banks have been rated generously by the ratings agencies. Merrill Lynch said recently that Iceland's banks should be considered as BBB risk. Glitnir is the first Icelandic bank to be rated by S&P. Moody's Investors Service gives the bank a long-term rating of A1, which is two notches up on S&P. Kaupthing is rated A1 by Moody's and Landsbanki Islands has an A2 rating.
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